Written by Claus Mortensen, Principal Analyst, Ecosystm.
August 2024
The infrastructure supporting global trade payments, though increasingly digital overall, still relies on established systems. This can lead to higher costs and inefficiencies. In the fourth quarter of 2022, the global average cost of sending USD 200 was 6.2% - more than twice the Sustainable Development Goal target of 3%, as per the World Bank's Remittances Prices Worldwide Database.
One contributor to these inefficiencies is the processes used in cross-border payments.
Traditionally, these have been handled by established banks using a network of bilateral relationships. This structure can introduce delays and costs for the banks involved, which can then impact businesses and consumers relying on these networks. Digital currencies built on blockchains offer an alternative approach to payments that could potentially be more efficient, while still adhering to regulations. However, further research and development are needed to fully understand the potential of this technology in this context.
How can blockchain-based digital money be integrated into the existing global payments infrastructure to reduce friction and costs? What are the best practices for ensuring interoperability between different forms of digital money? What kind of collaboration is needed to influence policy and improve the success of digital payments?
These were some of the themes that emerged at the closed-door, invitation-only Elevandi Insights roundtable at the Point Zero Forum 2024 hosted by Circle and Ripple. A select group of global regulators, investors, technology providers, and senior leaders from financial institutions joined the session to share their insights and strategies for navigating the complexities of digital payments in a rapidly changing financial landscape.
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